IIT alumni's startup aims to bring generic medicines directly from manufacturer to the consumer
Mumbai-based pharmaceutical startup Generico raised Series A funding of $14 million led by Lightbox, Whiteboard Capital, their angel investor, and Tomorrow Capital.
When IIT Bombay batchmates and friends Siddharth Gadia and Girish Agarwal delved deeper into the unorganised pharma segment for their second startup idea, the duo discovered a problem - generics.
While significantly cheaper medicines with the same effects and composition were abundantly available, the end consumer wasn't getting the required benefits.
“Primarily, you have branded medicines that simply rake up the marketing margins. We felt branding generic medicines defeated the purpose of making a generic drug that is easy to access by a consumer. The whole ecosystem works in a very non-consumer-centric way - pharmas are always been looking at healthcare from the delivery standpoint and not consumer standpoint,” says Siddharth.
This led to the birth of Generico. The duo opened their first store in Mulund, Mumbai in 2017. At present, it has over 41 stores.
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But this wasn't their first rodeo. In 2015, Siddharth and Girish had launched Workcell, a B2B pharma platform that solved the retail issues plaguing the pharma industry on the B2B side. It acted as a discovery platform connecting pharmas to distributors.
The startup helped reduce the bounce rate of prescriptions, turning out to be quite a hit and by 2016, the duo had onboarded over 20,000 pharma companies.
So, why move to B2C? Siddharth tells YourStory, “We took a call to move from B2B to B2C because the primary aim was to ensure that the end consumer gets benefited,” explains Siddharth.
The road to entrepreneurship
After graduating from IIT in 2009, Girish joined P&G. In 2011, he was bitten by the startup bug and founded GVS, a project management consulting firm for medium scale firm.
“However, after four years, I found the space to be opaque and slow, so I quit,” recalls Girish.
On the other hand, Siddharth was working in the metal refining space when he, too, realised that entrepreneurship was what he wanted to do. He founded Triptainment, a cloud tech platform that let people watch travel content without the internet. Soon, he also realised that it was a limited market.
Eventually, the two decided to team up and started to brainstorm.
“We looked into the retail sector and pharma looked lucrative where a lot of trade happens and tech can enable a lot of its work,” says Siddharth.
Thus came Workcell in 2015 followed by Generics in 2017. Girish explains that the two felt the need to shift their focus from B2B to B2C was because healthcare, as a segment, has the maximum impact on the end consumer.
“And that is where our focus needs to be,” he adds.
The duo chose the offline pharma route because they felt that pureplay tech wasn’t the answer. “The people who use most of the medicines for chronic illnesses aren’t mobile or tech first,” says Siddharth.
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How it works
The startup has built a network of retail outlets to create awareness and build the needed trust.
“We focussed on small store setups and began with three stores with a strong operating model,” Siddharth says. The stores, he adds, were in non-prime locations as the biggest challenge in going offline is managing rentals.
But, there is some amount of tech, especially in reducing manual intervention. Generico has integrated with distributors and suppliers to make the ordering process simple. The team claims to be doing close to 200,000 transactions a month, and says it has made gross sales of over Rs 100 crore in two and a half years.
Why look at generics
Siddharth explains there is a significant push of branded generic medicines, which are primarily marketed by doctors. Hence, generics are largely neglected. He explains the market for traded generics is four to five percent of the $19 billion branded generic medicine.
“While there has been a push towards traded generics, the execution has been ineffective. Also, doctors don’t have enough time to spread the word on generics. There isn’t a strong capability and model to understand the quality and pass on the information to the consumer,” says Siddharth.
This, in turn, causes a large gap. Medicines take up a large chunk of all healthcare expenses and this was a space the co-founders believed needed strong attention.
Funding and future
The startup raised Series A funding of $14 million led by Lightbox Ventures, Whiteboard Capital, an angel investor, and Tomorrow Capital. The team plans to use the funds towards expanding its retail footprint from 41 to 150 stores, enter more cites, build capabilities on the supply chain, technology, and data front.
Generico is also building a disease management solution for chronic patients.
On why Lightbox decided to invest in this pharma startup, Sandeep Murthy, Managing Partner at Lightbox Ventures, says,
“Healthcare is a space we were looking at closely. In that, pharmacy is one segment that needs attention. Chronic patients are fast growing in India. We believe that a shift in behaviour in medicine buying can bring in significant impact.”
Sandeep adds that Generico has been able to establish trust with its customers by knowing medicines and sourcing the right ones at the right time.
(Edited by Saheli Sen Gupta)
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